Farming industry. Regions
The government continues funding agro-producers via direct subsidies, bank loans and benefits. However current economic policies result in that huge amounts invested by the state in support of agriculture, deteriorate the overall financial state of ago-businesses.
In 2011 banks have allocated a total of more than Br 5 trillion for sowing and harvesting. Moreover, in March the president has once again released the agricultural organizations from the payments of principal debts on loans for purchasing agricultural machinery, accumulated over previous years (in 2008-2009 banks have provided agricultural organizations with about Br 3 trillion therefore their overall debt in March 2011 was Br 16.8 billion).
Milk production decreased in the region. However debts of agricultural enterprises have increased and reached more than Br 4.5 trillion. In January – July 2011 the agricultural production constituted 93.4% of the same period last year. Gomel region ranks the last in gross harvest of grain yielded.
The local authorities have traditionally explained troubles with crops by unstable weather: drought during the ripening of plants and rains during harvesting. Indeed, loss or damage to cereal crops has been fixed at 57 thousand hectares (15% of the area). Losses are estimated at approximately Br 45 - 47 billion. Br 7 billion has already been reimbursed by the insurance companies while the rest will be repaid in September.
The decline in agricultural production comes amid rapid growth of investment into agriculture. In 2010 investment worth USD 134 million has been attracted.
Over the last five years farms acquired over 14 thousand units of new equipment and assemblies, rebuilt and re-equipped technically 216 dairy farms, built 70 new grain cleaning and drying facilities, modern micro-climate vegetable storage with capacity of 33 000 tons.
Nevertheless production is not growing. For instance, audit by the State Control Committee of Gomel region has revealed that public funds of Br 360 billion allocated for the development of the leading agricultural enterprise JSC “Tihinichi” in Rogachev district for 6 years did not result in increase of production volumes.
Regardless of subsidies and debt relief, the welfare of rural workers is not improving. Real wages in the agricultural sector in the past six months have decreased by 12% to about 1.15 million, says the official statistics. However ordinary milkmaids and herdsmen, working at an average agricultural enterprise, receive even less than that, about Br 700 thousand rubles. Wages of tractor drivers during the harvest period are higher, up to Br 2.5 million. However they only make that much a few months a year.
In the first half of 2011 all procurement organizations purchased 24.3% less of cattle and 15.1% less of milk, compared with 2010. Compared with Grodno region, Gomel regions saw a decrease in purchases of meat from the population by 6 times, implying that Russian traders have been purchasing meat directly from households in the border regions of Gomel oblast.
Over 2000 of tractors work in the fields of the region 1500 of which were replaced with the new ones during the past two years, the remaining machinery works since the Soviet era. In the course of inspections concerning occupational health and safety requirements it has been revealed that usage of some machines should have been prohibited, 85 people were barred from working.
At the end of 2010 the profitability of grain production in the region amounted to minus 20%. The reason being is the low purchasing prices for grain, and general mismanagement. For example, according to the State Control Committee, about 120 tonnes of rye grain has been dumped near JSC “Pizhalovsky”. They have also revealed widespread cases of loss of grain during transportation and excessive losses in threshing.
By the end of July 2011 net losses of unprofitable enterprises constituted Br 4.9 billion. In 2010 there were 35 corruption-related crimes registered in the field of agriculture.
The region plans to harvest 2 million tons of grain and grain yields will be 36.6 quintal per hectare, which is higher than in 2010: 30.4 quintals per hectare. In total, more than 3 thousand units of machinery had been engaged in harvesting this year.
More than 12.2 thousand mechanics, including about 5400 combine operators have been hired all over the region. Wages of combine-operators varied from Br 100 to 150 thousand per day. All in all 40,000 workers have been working for the agriculture, including students of educational institutions of agricultural profile, workers of industrial enterprises, teachers and pupils from rural schools.
The average monthly wage of employees of agricultural enterprises in the Minsk region in January-June amounted to only Br 1.0756 million with the country-average salary Br 1,537,600.
In the beginning of 2010, financial pledges of agricultural organizations in the region amounted to about Br 6 trillion. All in all, the deficit of cash receipts from agricultural production constituted over 30%, or Br 1.6 trillion rubles.
Low profitability cannot do without the state support. This year Br 732.6 billion has been allocated for funding of agriculture from the state budget, or slightly less than 15% of its expenditure (Br 4 894.0 billion).
The state of agro-industry in the region varies from district to district. There are 4 districts in which agricultural enterprises are on good track of technical and financial support, namely, Shklovsky, Gorki and Mstislav districts. Harvesting machines operators are paid over Br 2 million by the agricultural enterprises in these districts – against Br 800 thousand in other districts. There is a general rule that could apply to any region: the farther away from the regional center - the lower the wages and the older and worn out the equipment. Wages in far-remote farms sometimes do not exceed Br 450-500 thousand.
Among the chronic problems that agricultural enterprises face in addition to low wages and worn-out machinery is also permanent shortage of skilled staff. They are in permanent need of agronomists, livestock specialists, veterinarians, gardeners, i.e. professionals in almost all profiles, regardless of the fact that dozens of schools specialize in the preparation of these specialists.
To date, harvesting campaign in Mogilev region is completed. The harvesting area in the region amounted to about 305 thousand hectares. The region harvested almost 1.1 million quintal of grain with average yield for the region amounting to 36.7 q/ha (in 2010 33.9 q/ha). Agricultural enterprises – leaders in harvesting of the region are located in Shklov (53.2 q/ha), Mogilev (45.7 q/ha) and Gorki (45 q/ha) districts.
Harvesting campaign in the region has been carried out under the banner of cost savings, given the purchase of fuel and lubricants was at the expense of loans by “Belagroprombank”, rather than directly subsidized by the local budgets.
The region suffers from the lack of machinery: out of the planned 1723 combines about 110 units were missing to transport the grain.
Official data says the yield of grain in the region was 32.3 q/ha against 30.7 q/ha in 2010.
The Labour and the Tax Ministries are considering the possibility to include persons engaged in some economic activity without forming a legal entity in the social security system. When the decree No 337 comes into effect, the number of private entrepreneurs is likely to reduce due to the possibility of reducing the tax burden when switching to a tax payment as an individual. 95% of self-employed, including PE, pay insurance premiums on the basis of the minimum wage. The number of self-employed citizens is expected to increase, the number of insurance contributions to the pension system from PE will decrease, the number of citizens who will pay a fee to finance government spending will decrease by several tens. Self-employed citizens have the alternative not to pay social security fees and save resources for future pensions, which, given the gradual restriction by the state of pension requirements could be a more long-sighted option.